The Best Metros for Homebuyers and Home Builders
Housing inventory has fallen continuously during the past nine years while buyer demand has only […]
Housing inventory has fallen continuously during the past nine years while buyer demand has only risen, says the National Association of Realtors (NAR). This trend has brought the market to where it is today and where it will likely be for the next 15 years. Home construction can take up to several years for large projects and 10 to 12 months for single-family homes, but NAR identified 10 metros where more homes are coming to the market now. These markets are also prime opportunities for home builders because the increase in inventory remains lower than demand. NAR says an increase in building permits usually signals a need for even more homes.
So, let’s now estimate how many homes need to be added to the market and compare those with the year-over-year change of single-family building permits in 2020. Indeed, the data shows that even though building permits rose in 2020, we need to build even more homes.
For instance, while there are nearly 1,330 fewer listings in Omaha, NE-IA area2, only 910 more single-family permits were issued in 2020 compared to 2019. Respectively, in Philadelphia, PA-NJ-DE-MD, nearly 12,310 listings need to be added to the market while only 1,090 more single-family permits were issued in 2020 from one year earlier. Thus, there are opportunities for more homebuilders to build homes in these areas. Additionally, keep in mind that an increase in building permits specifically for single-family homes implies that more people are financially ready to buy a home. See below how many homes need to be added to these markets in order to be back to the average level during the period 2016-2021:
